Sunday, November 13, 2016

You catch more flies with honey than vinegar

Progressives may now be making the same mistake with Donald Trump that they made with Justice Clarence Thomas.

Rather than trying to engage with and co-opt Clarence Thomas as a new Supreme Court justice, they attacked him so fiercely and for so long over so little, that he has become their worst nightmare - for decades.

Now it is happening again. Donald Trump has indicated one reason he decided to run for President was because he was so widely and mercilessly mocked by Democrats for honestly questioning President Obama's apparent lack of a provably-valid birth certificate.

Prior to that, he was a happy Democrat.

So now, instead of befriending Trump and encouraging him to re-find his once-progressive opinions, progressives riot and protest in the streets as if he's still the next coming of Hitler. All they achieve that way is making him and his voters even more sure he made the right decision by running as a Republican.

Trump currently seems willing to lay down the hatchet; progressives would be wise to do the same while he's still willing to work with them on common problems.

Wednesday, May 11, 2016

Too soon old. Too late smart.

Learned a few things about IRAs this week:
1) Once you take an IRA distribution, it's ALL taxable, and as ordinary income, because it went in pre-tax.
2) If that makes you want to undo the distribution, a) you must do so within 60 days, and b) you can only undo 1 IRA distribution per 365 days.
3) There's no longer multi-year income averaging for anyone but farmers and fishermen.
4) You can only deduct up to half of your adjusted gross income as a charitable contribution in any one year. (The rest can be deducted in a future year.)
5)This is not a problem when you rollover money from one IRA directly to another IRA, even with different companies.
6) It's also not a problem with Roth IRAs, which are taxfree when distributed. (However, unless you need the money, a Roth may be even more useful as a way to benefit grandkids.)
7) Once you reach age 70-1/2, you have to take a required minimum distribution, but you can take it from any of your IRAs, so long as you take enough to meet the requirement for all IRAs (about 3.65% in the first year, rising slowly thereafter under an IRS-supplied formula.)
8) If you don't need part or all of your RMD, you can have your IRA donate it directly to a 501(c)(3) charity, which
a) avoids all taxes on up to a $100K donation per year for both you and the charity, and
b) cannot also be declared as a tax deduction (because it's not part of your income.)
9) The charity you can designate for this may [Update: NOT] be a donor-advised fund, such as VanguardCharitable.org or T Rowe Price's ProgramForGiving.org. That way, you can give the RMD immediately, but decide later which specific 501(c)(3) charities get donations from the donor-advised fund, on what schedule and for what purpose. Better yet, once set up, such funds can continue for generations. [Update: Still a great way to channel charitable contributions, but cannot yet be legally used to receive RMDs.]
Long story short: As of today, "The Strasma Family Fund" at VanguardCharitable.org now exists as a way to help our church and favorite charities benefit more, both now and into future generations, while lowering our tax bracket from a too-large initial IRA distribution that can no longer be undone.
Yep, this is deep stuff, covered nicely in a "It's Your Wealth" class a neighbor and I are taking at the local senior center sponsored by feelincontrol.org I only wish I'd known all this before taking any IRA distributions. Oh well. "Too soon old. Too late smart."
(Note: also posted on Facebook and Google Plus.)

Update 12/10/17: I just discovered one further consequence of the unfortunate home purchase IRA withdrawal that led to the above post: If you take enough out of an IRA that it puts you in a high income bracket one year, you also get hit a year later with a much increased cost for Medicare for the next year, in my case up more than double. Overall, an expensive lesson. It would have been better to buy the home with a 5 year loan than IRA cash, as that would have had the effect of income averaging the IRA withdrawals.